Section 196 of the Companies Act, 2013 contains provisions about Appointment of Whole Time Director/Managing Director or Manager in a company. The section contains provisions as to who qualifies to be a director in a company. The section contains many events that render a person disqualified from becoming a director. One of the criteria mentioned in the section is age of an individual who wants to become a director. Our scope of discussion in this article will be the Minimum and maximum age of Directors.
Provisions of Companies Act regarding Minimum and Maximum age of the directors
Sec.196(3), of the Companies Act,2013 states that any company should not employ a managing director, whole-time director or manager who is below the age of 21years or a person who is above age of 70 years.
In case a company wants to appoint a person, who has crossed an age of 70 years than a company may do so by passing a special resolution. The explanatory statement should be provided with the notice for such motion, where justification should be given to hire that person.
Legal Framework: Companies Act, 2013
The Companies Act, 2013, is the foundational legal framework governing corporate affairs in India. While it doesn’t provide a blanket age limit for directors, it does specify age limits for certain categories of directors:
- Managing Director (MD), Whole-Time Director (WTD), and Manager:
- Minimum Age: 21 years
- Maximum Age: 70 years
However, a director over the age of 70 years can be appointed provided there is Special Resolution (SR).
If a person aged 70 or above is to be appointed as an MD, WTD, or Manager, a Special Resolution is mandatory. However, if the Central Government is convinced that such an appointment is in the company’s best interest, it can be allowed even without an SR.
These age limits are specifically mentioned under Section 196 of the Companies Act, 2013. They are applicable to MDs, WTDs, and Managers because these positions carry significant responsibilities and powers within a company.
- Independent Directors (IDs):
- Minimum Age: Not explicitly mentioned
- Maximum Age: No specific limit in the Companies Act
The Companies Act doesn’t prescribe a minimum age for Independent Directors. However, it also doesn’t set a maximum age limit for IDs. This leaves room for flexibility in appointing Independent Directors, but it’s crucial to consider practical implications and best practices.
- Other Non-Executive Directors (NEDs):
- Minimum Age: Not explicitly mentioned
- Maximum Age: No specific limit in the Companies Act
Similar to Independent Directors, the Companies Act doesn’t specify age limits for other Non-Executive Directors. This includes NEDs who are not MDs, WTDs, or Managers.
SEBI (LODR) Regulations, 2015: Additional Considerations- For listed entities, the Securities and Exchange Board of India (SEBI) introduced the Listing Obligations and Disclosure Requirements (LODR) Regulations in 2015. These regulations complement the Companies Act and include age-related provisions:
- Independent Directors (IDs):
- Minimum Age: 21 years
- Maximum Age: 75 years
SEBI mandates a Special Resolution for appointing or retaining Independent Directors who are 75 years or older. SEBI’s regulations provide clarity on the age limits for Independent Directors in listed companies.
However, it’s important to note that these limits apply exclusively to listed entities and are in addition to the provisions of the Companies Act.
Practical Implications and DIN Applications- While the Companies Act and SEBI (LODR) Regulations offer legal guidelines, practical considerations play a pivotal role in directorship appointments:
- DIN Application:-Even though the Companies Act doesn’t specify a minimum age for directors in general, the application for Director Identification Number (DIN) through Form DIR-3 stipulates a minimum age requirement of 18 years. This aligns with the Indian Contract Act, 1872, which defines the majority age as 18 for entering into valid contracts.
- Age Flexibility:- Beyond the legal framework, practicality and the company’s specific needs often influence directorship appointments. Age alone is not the sole criterion; competencies, experience, and alignment with the company’s vision are equally vital.
FAQs
Is there a minimum age requirement for directors in non-listed entities?
The Companies Act doesn’t specify a minimum age for directors in non-listed entities. However, the application for Director Identification Number (DIN) requires individuals to be at least 18 years old.
Can a person above 70 become an MD, WTD, or Manager in a company?
Yes, a person above 70 can become an MD, WTD, or Manager, but it requires a Special Resolution. The Central Government can also permit such appointments if it deems them beneficial to the company’s interests.
Do Independent Directors in listed companies have a maximum age limit?
Yes, Independent Directors in listed companies have a maximum age limit of 75 years, as per SEBI (LODR) Regulations. Beyond this age, their appointment requires a Special Resolution.
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